The Subjective Cost of Young Children: A European Comparison

Researchers at the Austrian Academy of Sciences, the University of Vienna and IEP Sciences Po Paris (OSC) have investigated how the birth of a child affects the objective and subjective economic situation of young parents in Europe. The results are now published in the journal Social Indicator Research.

The authors ask if and to what extent a career break is primarily reserved for mothers when they want to go back to their jobs after the baby break. Is it the case in every European country that parental leave massively harms women in their working life, while fathers have no losses? Or does the work and income situation for young parents differ between European countries?

To answer these questions, the authors mobilize longitudinal data from the European Union’s Statistics of Income and Living Conditions, covering the time period 2004 to 2019 for 30 European countries. For the current study, a sample from a total of 180,000 couples was evaluated. The analytical focus was set on couples who did not have a child in the first year and then had a child in the second year, while couples were observed for a total of four years. This allowed the authors to observe changes in women’s and their partners’ employment and income shortly after the event of a childbirth, as well as birth-related changes in the parental subjective assessment of their financial situation.

In a nutshell, results show that newborns decrease subjective economic well-being in all regions, yet with economies of scale for the number of children. The substantial labour income losses of mothers (indirect costs) explain only a small part of subjective child costs. In the frst year after birth, these losses are mostly compensated for via public transfers or increased labour income of fathers, except in regions where women take extensive parental leave. This suggests that the initial drop in subjective economic well-being that the authors observe shortly after childbirth is caused by increased expenses due to the birth of a child (direct costs) and other drivers such as stress that are refected in the self-reported indicator.

More specifically, the study finds that everywhere in Europe, mothers take longer breaks from work than fathers – but nowhere else do women stay at home as long as in the German-speaking countries. While in these countries, around 60 percent of mothers are back in the labor market when their child turns two, in the Nordic countries more than 80 percent of women are back in the workforce – with roughly the same level of compensation payments (parental leave) in both regions. In addition, in German speaking countries, many mothers still take part-time jobs (mostly half-day jobs) after maternity and parental leave, while the large majority of Scandinavian women go back to work full-time after having children.

But not only in Scandinavian, but also in Western, Eastern and Southern European countries, the slump in working life for mothers is by far not as pronounced as in the German-speaking countries examined. Also in France, Belgium and the Netherlands, more than 80 percent of women are back in the job two years after childbirth, most of them full-time. Why is the situation in German-speaking countries so different? On the one hand, formal childcare options (especially in terms of all-day care for very young children and afternoon school for older children) are still insufficient in many regions. In parallel, in many parts, especially the rural ones, social norms still stigmatize full-time working mothers, as in the absence of alternative all-day care options, the maternal absence in the afternoon is considered as harmful for the child’s development. In this study, young parents are only followed up for a couple of years, but it is known from other studies that the long-term income losses for mothers (including retirement pensions) are higher in German-speaking countries in comparison to many other European countries (‘motherhood penalty’).

The picture is quite different for fathers in all of Europe: The authors observe that despite a decline in labor market income for mothers after childbirth, the household income of many couples remains relatively constant across all regions in the short term. This is, firstly, because – on average – a lot is offset by public subsidies, such as lump-sum benefits and leave payments. Secondly, the labor incomes of many fathers are observed to increase slightly after the birth of a child in many European countries regions.

The full article:

S. Spitzer, A. Greulich, B. Hammer (2022): “The subjective cost of young children: A European comparison.” Social Indicators Research, https://doi.org/10.1007/s11205-022-02942-5.

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